This show explores the definitions and relevance of an investor’s IQ, EQ and FQ. Major market events like the one that we have been experiencing these past few weeks puts us to the test on all three. The DALBAR Quantitative Analysis of Investor Behavior Study uncovers data that explains the mistakes that investors make. These mistakes tend to be driven by emotions and have caused investors to underperform broad markets significantly over the past 20 plus years. The show starts by discussing our intelligence quotient (IQ) which is a total score derived from a set of standardized tests designed to assess human intelligence. Next is our EQ. An average EQ score ranges from 90-100, with a perfect score measuring 160. Those who score high on this test tend to demonstrate tendencies to make an effort to understand and empathize with others. Those with below average EQ scores can increase their emotional intelligence by learning to reduce negative emotions. Finally, there is our FQ. Financial Quotient (FQ), also referred as financial intelligence (FI), financial intelligence quotient (FiQ) or financial IQ, is the ability to obtain and manage one’s wealth by understanding how money works. Like emotional quotient (EQ), FQ derived its name from IQ (intelligence quotient). Our financial wellbeing is the consequence of large and small financial decisions. A higher FQ score can be obtained and enhanced through education. Jason and Alex help listeners understand the importance of FQ, especially during times like these.
In this show you will learn about:
- How an investor’s IQ, EQ and FQ all play a role in their investment experience
- Why the average investor has underperformed the broad markets
- How to improve your Financial Quotient